Santos and Perdaman sign HoA for an ammonium plant

Kevin Gallagher, CEO and Managing Director of Santos, and Vikas Rambal, Founding Chairman of Perdaman, shaking hands at the heads of agreement signing in Narrabri, New South Wales, Australia

OIL and gas company Santos and diversified company Perdaman have signed a heads of agreement to further study and design a Perdaman ammonium production facility. The facility is to use gas from Santos’ A$3bn (US$2bn) Narrabri Gas Project in Narrabri, New South Wales (NSW), Australia.

In February, the companies signed a non-binding agreement for the supply of 14.5 PJ/y of natural gas over a 20-year period, subject to a final investment decision for the gas project. The companies said in February that the ammonium nitrate plant is to be developed in parallel with the gas project. The plant, to be located near Narrabri, is to use appraisal and early-development gas.

This preliminary front-end engineering design study (pre-FEED) is the next step in the development of the plant, reported by The Australian to be worth A$2bn.

The study will also further define hybrid power options. Electricity for both the gas project and the ammonium plant will be provided using a combination of gas-fired power generation and renewable energy.

The proposed ammonium plant is expected to support at least 700 jobs during construction. Ongoing operations are expected to support 100 direct and 100 indirect jobs. The Narrabri Gas Project is also expected to support hundreds of jobs during construction and operation.

According to Perdaman’s Founding Chairman Vikas Rambal, the plant will also bring competition to the NSW market, adding that this “will be good for farmers in the region”.

According to Kevin Gallagher, CEO and Managing Director of Santos, the Narrabri Gas Project could potentially produce enough gas to supply up to half of NSW’s needs. He said that manufacturers are increasingly supporting it as they recognise the advantages of having “a reliable and competitively-priced source of gas in NSW”.

Additionally, the gas project is ideally placed for new manufacturing projects as it is near to the new Inland Rail, which links key east coast ports and the national highway system.

Both the gas project and ammonium plant are expected to boost small businesses and the communities “in and around Narrabri”.

The Australian reports that according to Santos the “controversial” gas project will provide a solution to the “tight east coast market, where users are struggling to strike deals at affordable prices”.

The Narrabri Gas Project is currently being assessed by the NSW Department of Planning ahead of a decision by the Independent Planning Commission. According to The Australian, Santos submitted its environmental impact statement to the NSW Department of Planning and Environment in 2017.

Santos reportedly argues that uncertainty over when the gas project will receive a decision needs to be resolved. It expects the project will bring relief to struggling manufacturers and heavy industry in the state and provide a cheaper option than looming LNG imports.

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